Greetings,

A historic handoff is underway at the Federal Reserve, with Kevin Warsh now confirmed as Fed chair, and Jerome Powell staying on as governor until 2028. More on all of that below.

Also in this edition:

• Xi Jinping pledges openness to US business leaders
• Investors get 5% yield on 30-year Treasuries
• Profit margins seen as potential bubble amid rising costs
• Managers move to address troubled private credit funds

Kevin Warsh has been confirmed by the Senate as chair of the Federal Reserve in a 54-45 vote, largely along party lines. Warsh, who previously served at the Fed from 2006 to 2011, succeeds Jerome Powell. He assumes leadership as inflation remains above the Fed's 2% target and markets scale back expectations for rate cuts, amid pressure from the White House and a divided policy committee.

Chinese President Xi Jinping has signaled a move toward greater openness during a meeting with US business leaders accompanying President Donald Trump. Xi emphasized the mutual benefits of American involvement in China's reform and assured that "China's door to the outside world will only open wider." The business delegation included executives from Tesla, Apple, Boeing and Nvidia.

Investors have secured a 5% yield on 30-year Treasuries for the first time since 2007, driven by rising energy prices and inflation concerns. The $25 billion auction saw middling demand as yields hit their highest levels in almost a year. Deutsche Bank's Steven Zeng notes that 5% yields typically attract pension funds, but sustained inflation could push yields higher.

Corporate profit margins have reached a record 13.9%, driving stock market valuations to new highs. However, the National Association for Business Economics reports growing concern among businesses about rising material costs, particularly energy, which could lead to shrinking margins. This shift in outlook comes as wholesale inflation accelerates and supply chain disruptions persist due to geopolitical conflicts.

Privacy-focused cryptocurrency Zcash is drawing renewed investor interest as some early bitcoin supporters look for smaller digital assets with growth potential. Zcash, which allows users to shield transaction details such as sender, recipient and amount, has surged roughly 50% over the past month and more than 1,100% over the past year. Supporters view the token as offering features that distinguish it from bitcoin as the broader crypto market matures, while critics point to privacy-focused functionality and the volatility historically associated with smaller cryptocurrencies.

KKR, BlackRock and Apollo Global Management are implementing strategies to address issues in their private credit funds, which have become significant reputational challenges amid market turbulence. KKR has launched a $300 million share buyback for FS KKR Capital, BlackRock has integrated HPS executives to improve TCP Capital and Apollo is reportedly considering selling MidCap Financial Investment. These moves highlight the difficulties faced by business development companies in a volatile market.